Chindex International, Inc. Reports First Quarter Fiscal 2010 Financial Results
First Quarter Fiscal 2010 Financial Results
Revenue for the first quarter of fiscal 2010, which ended June 30, 2009,increased 41% to $45.3 million from $32.1 million in the first quarter offiscal year 2009. Revenue from the Medical Products division increased 86% to$23.3 million from $12.5 million in the prior year period, and revenue fromthe Healthcare Services division increased 13% to $22.0 million from $19.6million in the first quarter of fiscal year 2009. Revenue performance reflectsincreased medical products sales, including revenue from the sale of twodaVinci units, and year over year growth in inpatient and outpatient revenuein the Healthcare Services division.
During the quarter, the Company recorded income from operations of $5.3million, a significant increase from $753,000 in the same quarter of last year.Total operating costs and expenses was $40.1 million compared to $31.3 millionin the prior year period.
Operating expenses in the first quarter of fiscal 2010 include multi-yearphysician contracts renewed at higher rates in calendar 2008, additionalmedical personnel in Beijing and Shanghai hospitals and the Guangzhou clinic,increased direct patient care costs and increased medical product salesactivities versus the prior year period. Additionally, Chindex recognizeddevelopment and startup expenses of approximately $329,000, equivalent toapproximately $0.02 per diluted share, and non-cash stock compensation expenseof $689,000, equivalent to approximately $0.04 per diluted share, in the firstquarter of 2010. In the prior year period, the Company's development andstartup expenses in the Healthcare Services division were not material andnon-cash stock compensation expense was $576,000 or roughly $0.04 per dilutedshare.
Roberta Lipson, President and CEO of Chindex, commented, "In the firstquarter of fiscal 2010, we completed deliveries under our KfW Development Bankcontracts and witnessed continued demand for the products from our diversifiedportfolio of leading medical equipment, particularly robotic surgical systems,including the sale of two daVinci surgical systems, as well as women's healthimaging systems, cosmetic laser systems and clinical chemistry product lines.For healthcare services, we were particularly pleased to see growth in bothinpatient and outpatient services in Beijing and Shanghai markets, as well asincreasing patient revenues at our Guangzhou facilities."
Under new U.S. accounting principles which require the Company to recordits warrants at fair value, the company recorded a non-cash charge tomiscellaneous expense of approximately $741,000 or $0.05 per diluted share toreflect the change in the fair value of its outstanding warrants during thequarter.
The Company's tax expense was approximately $1.6 million in the firstquarter of 2010, an effective tax rate of 32.6%. In the prior year period, taxexpense was approximately $1.2 million.
Net income in the first quarter of fiscal 2010 was $3.3 million, or $0.20per diluted share. This compares to a net loss of $161,000, or $(0.01) perdiluted share, in the first quarter of fiscal 2009. Excluding the impact ofthe change in fair value of outstanding warrants, net income per diluted sharewas approximately $0.25.
Medical Products division business results:
For the first quarter of fiscal year 2010, revenue increased 86% to $23.3million from $12.5 million in the prior year quarter. The year over yearcomparison reflects continued growth in the Medical Products division as wellas the negative impact of the Sichuan earthquake, which disrupted purchasingbehavior in the comparable quarter of the prior year. Gross profit in theMedical Products division increased to $5.8 million from $2.6 million in theprior fiscal year's first quarter. Gross profit margin increased to 25%, from21% in the prior year period. Selling, marketing, general and administrativeexpenses for the Medical Products division increased 19% to $5.6 million from$4.7 million in the first quarter of the prior fiscal year. Increased expensesduring the period primarily reflect increased staff levels to support higherrevenues.
Lipson added, "Our first quarter medical products sales were strong andcontinued the momentum we witnessed in the March quarter as we shipped theremainder of our KfW Development Bank contracts. As a proven leader in thesector, we remain focused on enhancing and diversifying our portfolio so thatwe address new and existing markets. To this end, today we announced exclusivedistribution agreements with Biotest AG and Cutera, Inc. for exclusivedistribution of clinical chemistry products and aesthetic laser systems inChina -- two exciting new product offerings. Our Medical Products divisioncontinues to be well-positioned to meet the increasing need for high endmedical products in China."
Healthcare Services division business results:
Revenue in the first quarter of the fiscal year 2010 was $22.0 million, anincrease of 13% from $19.6 million in the prior year quarter. Operating costsincreased by 7% to $17.9 million from $16.8 million in the prior year's firstquarter, reflecting increases in compensation and direct patient care costsresulting from expansion of hospital network operations offset by a decreasein other operating costs. Income from operations before foreign exchange gainsincreased to $4.1 million, from the $2.8 million in the prior year period.
Lipson stated, "First quarter healthcare services performance reflectsincreasing inpatient and outpatient traffic in the Beijing and Shanghaimarkets as well as a continued focus on efficiency and cost containment. Wewere particularly pleased with our operating income performance in the firstquarter of 2010 although I'd like to point out that in the prior year period,we experienced higher than normal operating expenses related to JCIaccreditation. Our UFH brand continues to be the leading provider of premiumcare in China and we believe that our long term opportunity is compelling."
Management will host a conference call today at 8:00 am ET to discussfinancial results. To participate in the conference call, internationalcallers dial 1-719-457-2655 and domestic callers dial 1-888-551-9020approximately 10 minutes before the conference call is scheduled to begin. Thetelephone replay will be available on the day of the call at (international)1-719-457-0820 and (domestic) 1-888-203-1112, pass code 2725441; and continueto be available through August 24, 2009. This call is also being webcast andwill be accessible at Chindex's website http://ir.chindex.com/events.cfm . Theevent will be archived and available for replay through August 17, 2009.
About Chindex International, Inc.
Chindex is an American healthcare company that provides healthcareservices and supplies medical capital equipment, instrumentation and productsto the Chinese marketplace, including Hong Kong. Healthcare services areprovided through the operations of its United Family Hospitals and Clinics, anetwork of private primary care hospitals and affiliated ambulatory clinics inChina. The Company's hospital network currently operates in Beijing, Shanghai,Guangzhou and Wuxi. The Company sells medical products manufactured by variousmajor multinational companies, including Siemens AG and Intuitive Surgical,for which the Company is the exclusive distribution partner for the sale andservicing of color ultrasound systems and surgical robotic systemsrespectively. It also arranges financing packages for the supply of medicalproducts to hospitals in China utilizing the export loan and loan guaranteeprograms of both the U.S. Export-Import Bank and the German KfW DevelopmentBank. With twenty-eight years of experience, approximately 1,300 employees,and operations in China, Hong Kong, the United States and Germany, theCompany's strategy is to expand its cross-cultural reach by providing leadingedge healthcare technologies, quality products and services to Greater China'sprofessional communities. Further company information may be found at theCompany's websites, http://www.chindex.com andhttp://www.unitedfamilyhospitals.com .
Safe Harbor Statement
Statements made in this press release relating to plans, strategies,objectives, economic performance and trends and other statements that are notdescriptions of historical facts may be forward-looking statements within themeaning of Section 27A of the Securities Act of 1933, as amended (the"Securities Act"), and Section 21E of the Securities Exchange Act of 1934, asamended (the "Exchange Act"). Forward-looking information is inherentlysubject to risks and uncertainties, and actual results could differ materiallyfrom those currently anticipated due to a number of factors, which include,but are not limited to, the factors set forth under the heading "Risk Factors"in our annual report on Form 10-K for the year ended March 31, 2009, updatesand additions to those "Risk Factors" in our interim reports on Form 10-Q,Forms 8-K and in other documents filed by us with the Securities and ExchangeCommission from time to time. Forward-looking statements may be identified byterms such as "may," "will," "should," "could," "expects," "plans," "intends,""anticipates," "believes," "estimates," "predicts," "forecasts," "potential,"or "continue" or similar terms or the negative of these terms. Although webelieve that the expectations reflected in the forward-looking statements arereasonable, we cannot guarantee future results, levels of activity,performance or achievements. We have no obligation to update theseforward-looking statements.
The Company operates in two businesses: Healthcare Services and MedicalProducts. The Company evaluates performance and allocates resources based onprofit or loss from operations before income taxes, not including foreignexchange gains or losses. The following segment information has been providedper Statement of Financial Accounting Standards No. 131, "Disclosures aboutSegments of an Enterprise and Related Information:" (in thousands exceptpercentages)For further information, please contact: Integrated Corporate Relations Ashley M. Ammon Tel: +1-203-682-8200 CHINDEX INTERNATIONAL, INC. CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (in thousands except share and per share data) (Unaudited) Three months ended June 30, 2009 2008 Product sales $23,283 $12,496 Healthcare services revenue 22,048 19,572 Total revenue 45,331 32,068 Cost and expenses Product sales costs 17,469 9,896 Healthcare services costs 16,750 15,735 Selling and marketing expenses 3,160 2,458 General and administrative expenses 2,678 3,226 Income from operations 5,274 753 Other (expenses) and income Interest expense (273) (226) Interest income 472 469 Miscellaneous (expense) income - net (647) 7 Income before income taxes 4,826 1,003 Provision for income taxes (1,573) (1,164) Net income (loss) $3,253 $(161) Net income (loss) per common share - basic $.22 $(.01) Weighted average shares outstanding - basic 14,480,484 14,320,438 Net income (loss) per common share - diluted $.20 $(.01) Weighted average shares outstanding - diluted 15,943,992 14,320,438 CHINDEX INTERNATIONAL, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands except share data) (Unaudited) June 30, 2009 March 31, 2009 ASSETS Current assets: Cash and cash equivalents $15,580 $20,293 Restricted cash 634 1,854 Investments 53,103 51,502 Accounts receivable, less allowance for doubtful accounts of $5,116 and $5,041,respectively Product sales receivables 36,404 37,994 Patient service receivables 9,898 8,837 Inventories, net 11,260 11,346 Deferred income taxes 2,575 2,410 Other current assets 3,763 3,239 Total current assets 133,217 137,475 Restricted cash 1,572 1,437 Property and equipment, net 21,143 20,633 Noncurrent deferred income taxes 1,021 1,031 Other assets 1,927 2,061 Total assets $158,880 $162,637 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt, current portion of long-term debt and vendor financing $4,019 $1,631 Current portion of capitalized leases 13 22 Accounts payable 11,018 12,259 Accrued expenses 10,300 20,607 Other current liabilities 5,177 4,148 Deferred revenue 2,011 1,539 Income taxes payable 1,581 1,568 Total current liabilities 34,119 41,774 Long-term debt, vendor financing and convertible debentures 22,603 23,709 Long-term deferred revenue 1,750 595 Long-term deferred tax liability 119 119 Total liabilities 58,591 66,197 Commitments and contingencies Stockholders' equity: Preferred stock, $.01 par value, 500,000 shares authorized, none issued -- -- Common stock, $.01 par value, 28,200,000 shares authorized, including 3,200,000 designated Class B: Common stock - 13,464,807 and 13,452,007 shares issued and outstanding at June 30, 2009 and March 31, 2009, respectively 135 135 Class B stock - 1,162,500 shares issued and outstanding at June 30, 2009 and March 31, 2009, respectively 12 12 Additional paid-in capital 96,562 95,808 Accumulated other comprehensive income 3,055 3,072 Retained earnings (accumulated deficit) 525 (2,587) Total stockholders' equity 100,289 96,440 Total liabilities and stockholders' equity $158,880 $162,637 CHINDEX INTERNATIONAL, INC. SEGMENT INFORMATION
SOURCE Chindex International, Inc.
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